A subsidiary of Chinese electric vehicle (EV) assembler Nio has received 3.3 billion yuan ($471 million) in fresh capital from a consortium of investors backed by the Hefei government in eastern China’s Anhui province, boosting its car manufacturer gets a much-needed boost in developing its products and technologies.
The Shanghai-based company said in a statement on Sunday that it would also spend 10 billion yuan to subscribe to newly issued shares of subsidiary Nio China, but that its stake in the unit would be reduced from 92.1 percent to 88. 3 percent.
Following the share placement, Hefei Jianheng New Energy Automobile Investment Fund Partnership, Anhui Provincial Emerging Industry Investment and CS Capital, along with other existing shareholders of Nio China, will increase their ownership from 7.9 percent to 11.7 percent, Nio said.
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With “an improved balance sheet,” Nio will be “strategically positioned” to maintain its advantages in technology, products, services, and user community, promote a multi-brand strategy, succeed in broader markets, and “take the company to the next phase. of sustainable growth,” Nio, listed in both Hong Kong and New York, said in the statement.
It added that the Shanghai-based automaker has the right to subscribe to an additional 20 billion yuan of shares in the subsidiary by the end of 2025.
The transactions are subject to regulatory and internal approvals, Nio said.
Authorities in Hefei, the provincial capital, have long been strong supporters of Nio, which now runs two assemblies there.
The fundraising deal comes nine months after Nio, which is unprofitable, secured new money worth $2.2 billion from CYVN Holdings, an investment fund controlled by the Abu Dhabi government.
A photo taken on October 10, 2023 shows Nio’s production facility in Hefei, East China’s Anhui province. Photo: Xinhua alt=A photo taken on October 10, 2023 shows Nio’s production facility in Hefei, eastern China’s Anhui province. Photo: Xinhua>
The investment increased CYVN’s stake in Nio to 20.1 percent, and made CYVN the first Middle Eastern investor to hold a significant stake in one of China’s fastest-growing EV manufacturers.
“Raising more money, either by itself or through its subsidiary, is to Nio’s advantage as competition in China’s electric car market intensifies,” said Chen Jinzhu, the CEO of Shanghai Mingliang Auto Service, a consultancy. “Some cash-strapped EV players are facing difficulties in continuing their operations as their cash reserves are likely to dry up amid a discount war.”
Nio, founded in 2014, saw its second-quarter net loss narrow 2.7 percent from the previous three months to 5.05 billion yuan, in line with market consensus among analysts tracked by Bloomberg. Revenue rose 76 percent to 17.4 billion yuan, also in line with expectations.
Early this month, the automaker said it expected third-quarter delivery volumes to rise as much as 10 percent to a record high, fueled by state subsidies and growing demand from younger buyers.
Nio estimated that 61,000 to 63,000 electric vehicles would be sold in the three months to September 30, up from the previous record of 57,373 units in the previous quarter.
On September 19, the company unveiled the L60 SUV under its new Onvo brand, replacing Tesla’s best-selling Model Y. The SUV starts at 206,900 yuan, 43,000 yuan below the base Model Y edition.
Equipped with Nio’s removable battery, the L60 has a driving range of 555 km, equivalent to the Model Y’s 554 km.
The company’s battery swap technology allows drivers to get back on the road in minutes with a battery swap.
Currently, all cars under the Nio eponymous brand cost more than 300,000 yuan and compete with cars such as BMW’s X5 and Audi’s Q7. Onvo targets car buyers with a budget between 200,000 and 300,000 yuan.
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